The Impact of Social and Environmental Practices on Organizational Resilience

Prior research has argued that socially responsible or sustainable practices are positively associated with financial performance. Such work tests for a direct, and ideally causal, relationship. In this paper, we argue that these practices contribute to organizational resilience, which is a latent, unobservable variable. We develop resiliency theory by arguing that social and environmental practices (SEPs) buffer firms from losses and help them recover from crises. The strategic and tactical aspects of the SEPs are salient in determining these effects. We test our theory by examining the impact of the 2008 global financial crisis on 975 U.S.-based firms. Disaggregating our independent variable, SEPs, and dependent variable, organizational resilience, provides us a fine-grained understanding of how SEPs affect the resilience of firms in dissimilar ways.